A recent Ontario Court of Appeal decision is a useful reminder for businesses with layered corporate structures and the employees who work for them: if two companies are both involved in managing a worker’s employment, both may be liable for wrongful dismissal. In Boyce Estate v. 2113626 Ontario Inc., 2026 ONCA 323, the Court confirmed that related companies operating together can be treated as “common employers” and held jointly responsible for termination-related damages.
What is the common employer doctrine?
Many businesses now operate through multiple related entities. One company may appear on the employment contract, while another oversees scheduling, payroll, management, or day-to-day operations. These structures can make it harder to identify who the legal employer is when an employee is dismissed.
To address that problem, courts look at the reality of the working relationship—not just the corporate paperwork. If more than one company effectively acts as the employer, the law may treat them as common employers. As the Court of Appeal noted in an earlier case on the common employer doctrine, the definition of “employer” in these scenarios “should be one that recognizes the complexity of modern corporate structures, but does not permit that complexity to defeat the legitimate entitlements of wrongfully dismissed employees.”1
In practice, the court will ask who had real control over the employee’s work and an objective intention to create an employer/employee relationship between the parties.2 “Control” can include who hired the employee, who directed their duties, who controlled pay practices, and who benefited from the work being performed. If that control is shared, multiple corporations may share liability.
What happened in Boyce Estate?
Boyce Estate involved a hotel manager who was hired under a fixed-term contract and dismissed after only five months. She successfully obtained a wrongful dismissal judgment against one company, but that company did not satisfy the award. She then pursued a second related company that had also been involved in operating the hotel.
The motion judge found that the two companies were common employers because both were involved in the hotel’s operations and both played a role in creating and managing the employment relationship. That meant the second company could also be held responsible for wrongful dismissal damages as a common employer.
The second company appealed the motion judge’s findings, but the Court of Appeal upheld the decision. It agreed that the companies’ relationship with the employee and with each other supported a finding of common employment. The Court also rejected the argument that the second claim was unfair simply because it was brought after the first judgment. Since the second company had not been a party to the original lawsuit, and the corporate roles were not easy to untangle, the later claim was allowed to proceed.
Why this decision matters
For employers, the message is clear: using multiple corporations does not necessarily limit employment liability. If related entities are all involved in supervising a worker, setting terms of employment, or benefiting from the employee’s work, a court may decide that more than one company is the employer for legal purposes. That can expose multiple entities to wrongful dismissal damages and other employment-related obligations.
Businesses should not assume that the company named in the employment agreement is the only entity at risk. A better approach is to review how related companies actually interact with workers. Questions worth asking include: Who is directing the employee’s work? Who controls compensation and scheduling? Who makes termination decisions? If the answer is “more than one company,” the structure may create shared liability.
For employees, Boyce Estate is a reminder that, where related companies are involved in hiring, supervision, payroll, or day-to-day management, there may be grounds to claim against more than one employer. That can be especially important if one entity appears undercapitalized or unable to satisfy a judgment.
For employers, this is a good time to review corporate structures, HR practices, and assess liability.
Please contact Turnpenney Milne LLP for assistance with any employment law matter.
Written by: Emily Sheppard
[1] Downtown Eatery (1993) Ltd. v. Ontario, 2001 CanLII 8538 (ON CA) at para 36.
[2] O’Reilly v. ClearMRI Solutions Ltd., 2021 ONCA 385 (CanLII) at para 2.